This year, local government agencies have been under increased pressure to do more with less. They are required to continue delivering essential, first-rate services for taxpayers with budgets that keep tightening due to limited revenue, inflation, and rising costs. 

Look no further than the National League of Cities’ (NLC) most recent City Fiscal Conditions report, which notes, “Only 45% of city finance officers feel optimistic about meeting fiscal needs in FY2026, down from 64% in 2024.”

Local governments have shifted from pandemic recovery and are now in a period of fiscal restraint, according to NLC. So, as city leaders across the country begin planning for FY27, they will need to continue working to adapt and navigate these fiscal challenges.

One place (or line item) where they can often find unrealized value is with their fleets, which is often a significant expense. The following principles are some of the ways government fleets drive cost-savings and operational efficiency in a tight economic environment.

Right-Size the Fleet

The first step is often to look at the fleet holistically and determine that each vehicle has a purpose and is utilized.

Right-sizing the fleet is making sure the department has the right number of vehicles for what’s required. While every government entity’s needs are unique, the principle remains the same: vehicles that are not active still consume taxpayer resources through ownership and operating costs.

A city may view an unused pickup as a sunk cost, but every year it remains in service it continues incurring cost and losing value. It’s important to consistently evaluate the fleet size to reduce ownership costs, improve utilization, and use taxpayer dollars as efficiently as possible.

Every vehicle should have a defined purpose, documented utilization, and a clear business case. When an agency aligns fleet inventory with operational demand, they can often save without compromising service delivery.

Right-Type the Fleet

Many local government agencies have vehicles that are oversized for their actual work. Some examples we see often are large, less fuel-efficient vehicles being assigned to light administrative duties; and retired, specialty police vehicles being retained after operational needs have changed.

Right-typing the fleet means appropriately matching the vehicle to the job that’s required. A vehicle may be fully utilized and still cost more than necessary if it's larger, heavier or more specialized than the work requires. Matching vehicle specifications to operational needs can lower total cost of ownership without sacrificing service levels.

Modernize the Fleet

It’s no secret that older, high-mileage vehicles can be more trouble than they’re worth. Older vehicles often end up being expensive due to large repair needs, increased downtime, and higher depreciation. Fleet replacement decisions are often delayed during periods of budget pressure, but postponing replacement is usually more costly than a planned replacement strategy.

The City of Havre de Grace, Maryland, saw success from modernizing its fleet. The city reduced its fleet’s average age from 11 to 4.8 years, acquiring 69 new vehicles, selling 60 city-owned vehicles, and returning $190,031 in equity back to the city. In addition, the partnership increased cost predictability through leasing and lowered the city’s total cost of ownership.

The value goes beyond maintenance and depreciation. Newer vehicles often offer advanced safety technologies, improved fuel economy, and greater reliability, all of which can contribute to lower total operating costs.

Implement Optimal Replacement Cycles

In addition to modernizing the fleet, it’s important to implement optimal cycling patterns. When combined with real-time market data and in-depth knowledge of goals and budget, a detailed financial analysis allows for informed decisions about replacing, holding, or selling vehicles.

Paying attention to life-cycle management and setting thresholds that define when it’s time to replace vehicles can benefit the bottom line. With true remarketing expertise, government fleets are empowered to achieve the highest possible returns, regardless of age, mileage, or condition.  

Leverage Data to Drive Efficiency

Fleet managers should have visibility to essential vehicle data and reporting through connected car technology or plug-in telematics. With a comprehensive view of each vehicle, fleet operators can help track and evaluate their fleet strategy and its effectiveness.

Many fleets can become more efficient by leveraging telematics. The City of Miami Gardens significantly cut vehicle idle time since implementing Geotab’s telematics program. At its peak, the fleet experienced 75% idle time, which has now dropped to 68%. These improvements translate to over $61,600 in annual fuel and operational cost savings.

As local government leaders prepare for another challenging budget cycle, fleet management presents an opportunity to improve financial resilience without reducing services. By right-sizing fleets, matching vehicles to operational requirements, modernizing aging assets, cycling vehicles at optimal times, and leveraging data to improve decision-making, local governments can maximize budgets while continuing to meet the expectations of the communities they serve.